The General Approach to Identifying Activities, Activity Cost Pools, and Cost

question 11

True/False

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

---

Definitions:

Accounting Profits

The total revenue of a company minus the explicit costs and depreciation.

Normal Profits

The return to the business owners for the opportunity cost of their implicit inputs.

MRP

Marginal Revenue Product, a term in economics that represents the additional revenue generated by employing one more unit of a factor, such as labor or capital.

Investment

The allocation of resources, such as capital or time, in order to generate future profit or income.